Prices immediately softened as the news of Saddam Hussein’s capture reverberated around world markets. However, the flush of optimism about a return to stability in Iraq was short-lived. A series of violent incidents and protests by supporters of the former president boded against a swift improvement in conditions.

Head of the North Oil Company, Adel Kazzaz, also dashed hopes of an imminent restart for the Kirkuk-Ceyhan oil export pipeline, saying that the facility remained too vulnerable to attack. ‘Security measures remain insufficient to start the pipeline,’ he said.

Prices spiked on the same day as US government data showed a 5.1-million barrel crude draw in the week to 12 December – the fourth consecutive week of falling stocks. Inventories are 4.1 per cent down on the corresponding point in 2002. Analysts blamed refiners ramping up runs for end-of-year accounting purposes and a dip in imports to 9.1 million barrels a day (b/d). Heating oil stocks also fell as the northern hemisphere cold snap continued.

Traders’ fears were exacerbated by comments from Algiers echoing those of Saudi Petroleum & Mineral Resources Minister Ali Naimi regarding the reduced purchasing power of oil revenues in light of the strong dollar. ‘A lot of us [OPEC members] have lost purchasing power,’ Algerian Energy & Mines Minister Chakib Khelil said on 17 December.